Tough road ahead for energy sector
Poland was was one of the first countries in the region to introduce a new energy law (in 1997) and one of the first to implement the Tri-Party Agreement (TPA) principle, allowing it to sell heat directly to consumers. In 1999 Polish customers using more than 100 GWh of energy were allowed to freely choose their suppliers under the TPA principle. This was not introduced in the Czech Republic until 2002 and in Hungary until 2003.
However, since 2004 the TPA principle has applied to all industrial customers in Latvia, Hungary and the Czech Republic. Meanwhile, the number of Polish customers making use of the TPA remains low.
According to a report by Roland Berger Strategy Consultants, the sluggish liberalization and consolidation of the Polish energy sector is to blame. "Only five percent of eligible customers use the TPA principle," says Radosław Rogacki, the report's project manager and an energy and fuel market expert at Roland Berger. This compares to 25 percent in Hungary. Furthermore, from the beginning of 2006 individual Czech energy users can also decide who they want to buy their energy from. Although initial liberalization of the market in Poland was planned for 2006, the date has since been moved to 2007.
As far as privatization goes, Rogacki underlined that the current Polish government prefers to consolidate the industry before selling energy producers, hoping to create strong entities able to compete on international markets.
"One has to bear in mind that not every integration process leads to an improvement of the situation on the market," Rogacki warns. He stresses that the process has to be closely monitored by regulation and anti-monopoly offices. Rogacki also claims that the interests of extracting companies, producers and distributors have to be guaranteed to the same extent.
Poland's energy sector is set for some tough challenges. Although Poland still produces more energy than it needs, 60 percent of its production capacity is more than 30 years old. This means that over the next decade or so a number of facilities will be closed, and their combined power production is 800-900 MW of power. Between 2007-2020, plants producing a total of 3,500 MW will be shut down. If no new production facilities are built, Poland will soon become an importer of energy. "We also have to bear in mind the anticipated growth of energy use," Rogacki adds.
